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Fair value measurements (Tables)
 3 Months Ended
Mar. 31, 2017
Fair Value Disclosures [Abstract]  
Schedule of estimated fair values of certain of the Company's financial instruments
The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments. For stock in Federal Home Loan Bank, the carrying amount is a reasonable estimate of fair value because it can only be redeemed at par. For bank-owned life insurance, the carrying amount is the cash surrender value of the insurance policies, which is a reasonable estimate of fair value. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, the carrying amount is a reasonable estimate of fair value as these liabilities have no stated maturity.
 
 
 
 
Estimated fair value
 
 
Carrying or notional amount
 
Quoted prices in
active markets
for identical assets
 
Significant
 other observable
 inputs
 
Significant
unobservable
inputs
 
 
(in thousands)
 
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
Total
March 31, 2017
 
 

 
 

 
 

 
 

 
 

Financial assets
 
 

 
 

 
 

 
 

 
 

HEI consolidated
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
6

 
$
—

 
$
6

 
$
—

 
$
6

Available-for-sale investment securities
 
1,228,922

 
—

 
1,213,495

 
15,427

 
1,228,922

Stock in Federal Home Loan Bank
 
11,706

 
—

 
11,706

 
—

 
11,706

Loans receivable, net
 
4,679,728

 
—

 
10,881

 
4,816,099

 
4,826,980

Mortgage servicing rights
 
9,294

 
—

 
—

 
13,650

 
13,650

Bank-owned life insurance
 
144,661

 
—

 
144,661

 
—

 
144,661

Derivative assets
 
22,986

 
—

 
317

 
—

 
317

Financial liabilities
 
 

 
 

 
 

 
 

 
 
HEI consolidated
 
 
 
 
 
 
 
 
 
 
Deposit liabilities
 
5,675,090

 
—

 
5,671,729

 
—

 
5,671,729

Short-term borrowings—other than bank
 
2,300

 
—

 
2,300

 
—

 
2,300

Other bank borrowings
 
200,154

 
—

 
201,000

 
—

 
201,000

Long-term debt, net—other than bank
 
1,618,651

 
—

 
1,707,954

 
—

 
1,707,954

   Derivative liabilities
 
36,743

 
98

 
283

 
—

 
381

Hawaiian Electric consolidated
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
1,500

 
—

 
1,500

 
—

 
1,500

Long-term debt, net
 
1,318,871

 
—

 
1,402,690

 
—

 
1,402,690

Derivative liabilities
 
15,838

 
—

 
277

 
—

 
277

December 31, 2016
 
 

 
 

 
 

 
 

 
 

Financial assets
 
 

 
 

 
 

 
 

 
 

HEI consolidated
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
13,085

 
$
—

 
$
13,085

 
$
—

 
$
13,085

Available-for-sale investment securities
 
1,105,182

 
—

 
1,089,755

 
15,427

 
1,105,182

Stock in Federal Home Loan Bank
 
11,218

 
—

 
11,218

 
—

 
11,218

Loans receivable, net
 
4,701,977

 
—

 
13,333

 
4,839,493

 
4,852,826

Mortgage servicing rights
 
9,373

 
—

 
—

 
13,216

 
13,216

Bank-owned life insurance
 
143,197

 
—

 
143,197

 
—

 
143,197

Derivative assets
 
23,578

 
—

 
453

 
—

 
453

Financial liabilities
 
 

 
 

 
 

 
 

 
 
HEI consolidated
 
 
 
 
 
 
 
 
 
 
Deposit liabilities
 
5,548,929

 
—

 
5,546,644

 
—

 
5,546,644

Short-term borrowings—other than bank
 
—

 
—

 
—

 
—

 
—

Other bank borrowings
 
192,618

 
—

 
193,991

 
—

 
193,991

Long-term debt, net—other than bank
 
1,619,019

 
—

 
1,704,717

 
—

 
1,704,717

Derivative liabilities
 
53,852

 
129

 
823

 
—

 
952

Hawaiian Electric consolidated
 
 
 
 
 
 
 
 
 
 
Long-term debt, net
 
1,319,260

 
—

 
1,399,490

 
—

 
1,399,490

Derivative liabilities
 
20,734

 
—

 
743

 
—

 
743
Schedule of assets measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis were as follows:
 
 
March 31, 2017
 
December 31, 2016
 
 
Fair value measurements using
 
Fair value measurements using
(in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Money market funds (“other” segment)
 
$
—

 
$
6

 
$
—

 
$
—

 
$
13,085

 
$
—

Available-for-sale investment securities (bank segment)
 
 

 
 

 
 

 
 

 
 

 
 

Mortgage-related securities-FNMA, FHLMC and GNMA
 
$
—

 
$
1,025,138

 
$
—

 
$
—

 
$
897,474

 
$
—

U.S. Treasury and federal agency obligations
 
—

 
188,357

 
—

 
—

 
192,281

 
—

Mortgage revenue bond
 
—

 
—

 
15,427

 
—

 
—

 
15,427

 
 
$
—

 
$
1,213,495

 
$
15,427

 
$
—

 
$
1,089,755

 
$
15,427

Derivative assets (bank segment) 1
 
 

 
 

 
 

 
 

 
 

 
 

Interest rate lock commitments
 
$
—

 
$
317

 
$
—

 
$
—

 
$
445

 
$
—

Forward commitments
 
—

 
—

 
—

 
—

 
8

 
—

 
 
$
—

 
$
317

 
$
—

 
$
—

 
$
453

 
$
—

Derivative liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate lock commitments (bank segment) 1
 
$
—

 
$
—

 
$
—

 
$
—

 
$
24

 
$
—

Forward commitments (bank segment) 1
 
98

 
6

 
—

 
129

 
56

 
—

Window forward contracts (electric utility segment)2
 
—

 
277

 
—

 
—

 
743

 
—

 
 
$
98

 
$
283

 
$
—

 
$
129

 
$
823

 
$
—

1  Derivatives are carried at fair value with changes in value reflected in the balance sheet in other assets or other liabilities and included in mortgage banking income.
2 Liability derivatives are included in other current liabilities in the balance sheets.
Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
Mortgage revenue bond
 
2017

 
2016

(in thousands)
 
 
 
 
Balance, January 1
 
$
15,427

 
$
—

Principal payments received
 
—

 
—

Purchases
 
—

 
—

Unrealized gain (loss) included in other comprehensive income
 
—

 
—

Balance, March 31
 
$
15,427

 
$
—
Schedule of assets measured at fair value on a nonrecurring basis
The carrying value of assets measured at fair value on a nonrecurring basis were as follows:
 
 
 
 
Fair value measurements
(in thousands) 
 
Balance
 
Level 1
 
Level 2
 
Level 3
March 31, 2017
 
 
 
 
 
 
 
 
Loans
 
$
1,281

 
$
—

 
$
—

 
$
1,281

December 31, 2016
 
 
 
 
 
 
 
 
Loans
 
2,767

 
—

 
—

 
2,767

Real estate acquired in settlement of loans
 
1,189

 
—

 
—

 
1,189
Schedule of significant unobservable inputs used in the fair value measurement
Key assumptions used in estimating the fair value of ASB’s mortgage servicing rights used in the impairment analysis were as follows:
(dollars in thousands)
 
March 31, 2017

 
December 31, 2016

Unpaid principal balance
 
$
1,205,197

 
$
1,188,380

Weighted average note rate
 
3.95
%
 
3.96
%
Weighted average discount rate
 
9.5
%
 
9.4
%
Weighted average prepayment speed
 
8.2
%
 
8.5
%
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
 
 
 
 
 
 
 
 
Significant unobservable
 input value (1)
($ in thousands)
 
Fair value
 
Valuation technique
 
Significant unobservable input
 
Range
 
Weighted
Average
March 31, 2017
 
 
 
 
 
 
 
 
 
 
Residential loan
 
$
222

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Commercial loan
 
810

 
Sales price
 
Sales price
 
 
 
N/A (2)
Commercial loan
 
249

 
Fair value of property or collateral
 
Fair value of business assets
 
 
 
N/A (2)
Total loans
 
$
1,281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
2,468

 
Sales price
 
Sales price
 
95-100%
 
97%
Residential loans
 
287

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
42-65%
 
61%
Home equity lines of credit
 
12

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
 
 
N/A (2)
Total loans
 
$
2,767

 
 
 
 
 
 
 
 
Real estate acquired in settlement of loans
 
$
1,189

 
Fair value of property or collateral
 
Appraised value less 7% selling cost
 
100%
 
100%
(1) Represent percent of outstanding principal balance.
(2) N/A - Not applicable. There is one loan in each fair value measurement type.